Cuomo Subpoenas Eight Banks in Probe Over Mortgage Ratings

NEW YORK — New York Attorney General Andrew Cuomo has subpoenaed eight banks in a probe into whether misrepresentations were made about some securities backed by mortgages in order to improve their credit ratings, a person familiar with the investigation said Thursday.

The three major rating agencies — McGraw-Hill Cos.' Standard & Poor's, Moody's Corp.'s Moody's Investor Service and Fimalac SA's Fitch Inc. — also have received subpoenas in the probe, the person said. The subpoenas were issued late Wednesday, the person said.

The investigation is in its early stages and it's unclear if it could ultimately result in criminal or civil charges.

The New York Times reported the Cuomo subpoenas in its editions Thursday.

The Cuomo probe comes as federal prosecutors in Manhattan and the U.S. Securities & Exchange Commission are looking into whether several banks made misrepresentations to investors about securities backed by pools of mortgage bonds, known as collateralized debt obligations.

The Wall Street Journal reported Thursday that the U.S. Attorney's office in Manhattan is conducting a preliminary criminal probe of J.P. Morgan Chase & Co., Citigroup, Deutsche Bank and UBS, citing a person familiar with the matter. The Journal has reported Goldman Sachs and Morgan Stanley are under criminal scrutiny.

The Securities & Exchange Commission also has issued civil subpoenas to the banks in a probe of mortgage-backed securities, the Journal reported, citing a person familiar with the matter.